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The Produce Cess Act, 1966
The Road Transport Corporations Act, 1950
Article 301 in The Constitution Of India 1949
Article 304(b) in The Constitution Of India 1949
Section 4 in The Road Transport Corporations Act, 1950

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Patna High Court
The Bihar Agriculture Marketing ... vs The State Of Bihar And Ors. on 14 February, 2008
Bench: R Balia, B Ghosh

JUDGMENT

Rajesh Balia, C.J. and Barin Ghosh, J.

1. In all these writ petitions the constitutional validity of Bihar Agriculture Produce Market (Repeal) Act, 2006, (hereinafter referred to as 'the Repeal Act of 2006') has been challenged.

The petitioners, different in each writ petition, are alleging themselves to represent the interest of the persons employed at Bihar Agriculture Marketing Board, Market/Committees/Bazar Samities, the agriculturists and the Members of the Board / the Committees/Samites.

2. The learned Counsel appearing for the petitioners have raised number of contentions which were of various shades and colours but in substance, the contention was

(A) that the impugned Act has been enacted without application of mind and a colourable piece of legislation because the Bihar Agriculture Produce Market Act, 1960 (hereinafter referred to as 'the Act of 1960') had been tested and upheld by the Hon'ble Supreme Court as a reasonable restriction on freedom of marketing agriculture produce but before repealing that Act of 1960, no enquiry has been made into the necessity of change in legislative policy in furtherance of which Act of 1960 had been enacted indicating that the Repeal Act has been enacted without application of mind.

As a limb of this argument it was urged that in the object for enacting the Repeal Act, it has been stated that regulation of Agricultural Produce Markets through the Act of 1960 has failed to achieve its objects. This justification is not founded on any existing material inasmuch as the Marketing Board at the time of repeal had accumulation of assets worth rupees one ninety seven crores suggesting that the Bihar Agricultural Produce Market Board has been functioning well. Secondly in the aforesaid circumstances the enactment of Repeal Act of 2006 is a colourable exercise of legislative power because the purpose of the Repeal Act is to acquire the property of the Market Board and nothing else. Thirdly no study, as had been conducted prior to enactment of Act of 1960, has been carried out before enacting the Repeal Act of 2006. It amounts to fraud on the legislative power of the State.

3. Another aspect of the aforesaid contention about non-application of mind as to relevant consideration was stated to be that since the successful continuance of regulating the agriculture market produce under the Act of 1960, a legitimate expectation, has been raised in the minds of the agriculturists that the system will continue as it is. By enacting the Repeal Act of 2006, the legitimate expectation of the agriculturists has been belied for no valid reason.

Concluding this argument, it was urged that for the reasons aforesaid, the action of the State legislature in enacting Repeal Act is arbitrary, unreasonable therefore antithesis of the equality clause of Article 14 of the Constitution. It, therefore, infringes the fundamental rights guaranteed under Article 14 of the Constitution.

(B) The second contention that has been raised before us to support the ultra vires argument was that since the Act of 1960 was amended in 1982 by obtaining previous assent of the President for imposing market fees in terms of proviso to Article 304(b) of the Constitution, repeal of the said Act of 1960 also required prior assent of the President. That having not been taken, the constitutional mandate in enacting a valid law has not been followed.

It was next contended that in enacting the Repeal Act of 2006, the Rules of business which ought to have been followed before legislating an Act have not been adhered to and, therefore, the enactment of Repeal Act of 2006 is in contravention of the procedures laid down for enacting a valid law.

(C) Lastly, it was contended about the wholesome invalidity of the Repeal Act that the Act of 1960 was an affirmative action by the State in furtherance of implementing the Directive Principles of State Policy. The withdrawal of the said affirmative action in furtherance of implementing the Directive Principles of State Policy is not permissible under the Constitution. It was urged that though no mandamus can be issued to enforce the Directive Principles of State Policy, but once an affirmative action has been taken, the same cannot be allowed to be retraced by nullyfing the action taken in furtherance of Article 4 of the Constitution. Buttressing this contention further, Mr. Kanth, learned Sr. Counsel appearing for one of the petitioners urged that the ratio laid in Heydon's case governs the present case. He submitted that since the Act of 1960 was enacted to suppress the mischief of unregulating market of agricultural produce prevalent in the markets, the repeal of it without any material to substantiate the same would revive the mischief for suppressing of which previous enactment was enacted.

Reply:

4. In reply, learned Advocate General has submitted

(A) that a legislative enactment cannot be judged on the principles applicable to judicial review of an administrative action. It was pointed out that a legislative enactment is open to challenge only on two grounds, firstly, that it is beyond the legislative competence of enacting legislature, that is to say, the subject matter of enactment falls outside the field of legislation reserved for it. The legislative power to repeal any of the earlier enactments within this sphere is co-extensive with the power to enact such law. Since it is not the contention of any of the petitioners that the State Legislature has no legislative competence to enact the law on the subject on which the Act of 1960 was enacted, its repeal also cannot be beyond legislative competence. As a matter of fact, the question of legislative competence on the ground of lack of power to legislate such enactment has not been really disputed.

The second fetter on the legislative power of the State is that the law must not otherwise violate the fundamental rights or any other provisions of the Constitution.

No third ground is available for challenging the legislative Act. The question of malafide, non-application of mind, lack of reasons, promissory estoppel, legitimate expectations are all not the grounds on which a law enacted within the competence of Legislature can be challenged as ultra vires. No case of violation of any fundamental right or breach of any other constitutional constraint has been made out except vague statement that the repeal of the Act is unconstitutional.

(B) In response to the contention about the want of President's assent it was urged that since the repeal was not an enactment, for which the previous assent of the President was required under the provisions of the Constitution. It was urged that under proviso to Article 304(b) of the Constitution, the requirement of previous assent of the President before presenting the Bill in the State Legislative Assembly is for the purpose of imposing reasonable restriction on free movement of trade, commerce or interaction throughout the territory of India, but the same condition is not for leaving any such existing restriction. By repealing the Act of 1960 removing the regulatory measures and imposition of fee on trade and commerce on the commodities movement into the agricultural markets being not an enactment falling within the ambit of Article 301, restriction imposed under proviso to Article 304(b) is not applicable.

(C) It was further submitted by learned Advocate General that the Act of 1960 was not in furtherance of any Directive Principles of the State Policy enumerated in Part IV of the Constitution, but was an enactment for imposing reasonable restrictions on the freedom of trading in agriculture produce in public interest. Power of imposition of restriction under Article 19(6) is enabling one and is not a part of the fundamental right. Therefore, by not restricting the freedom of trade or removing the existing restriction, no violation of fundamental rights takes place, which could be examined by this Court for the purpose of examining the validity of legislation. There is no fundamental or vested right in continued restrictions and regulations over any of the fundamental right.

5. Before we proceed further we may notice one fundamental principle about examining the validity of any law is that there exists a presumption about constitutionality of a legislative enactment, that the Legislature does not exceed its jurisdiction, and the burden of establishing that the Act is not within the competence of the Legislature, or that it has transgressed other constitutional mandates, such as those relating to fundamental rights, is always on the person, who challenges its vires. Unless it becomes clear beyond reasonable doubt that the legislation in question transgresses the limits laid down by the organic law of the Constitution, it must be allowed to stand as the true expression of the people's will. The principle is, however, subject to the exception that once the citizen is able to establish that the impugned legislation has invaded his fundamental rights under Article 19(1)(g) of the Constitution, the State must justify that the law is saved under Clause (6) of the same Article.

6. As a part of presumption about constitutionality, every state of fact and every circumstance has to be presumed to exist in favour of the validity of the legislation that it does not violate any fundamental rights unless the presumption is displaced.

Reference in this connection may be made to Charanjit Lal Chowdhury v. The Union of India wherein Hon'ble Fazal Ali, J in his concurring opinion said

...it is the accepted doctrine of American courts, which I consider to be well founded on principle, that the presumption is always in favour of the constitutionality of an enactment, and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles.... The onus is therefore on the petitioner to show that the legislation which is impugned is arbitrary and unreasonable.

The principle was further stated in unequivocal terms in Shri Ram Krishna Dalmia and Ors v. Justice S.R. Tendolkar and Ors. . It was stated -

that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles;

...

that it must be presumed that the Legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds;

that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation.

7. This view was reiterated in a later decision of the Hon'ble Supreme Court in the case of Public Services Tribunal Bar Association v. State of U.P. and Anr. . It said in no uncertain

terms -

the constitutional validity of an Act can be challenged only on two grounds viz. (i) lack of legislative, competence; and (ii) violation of any of the fundamental rights guaranteed in Part III of the Constitution or of any other constitutional provisions. Except the above two grounds, there is no third ground on the basis of which the law made by the competent legislature in its plenary power can be invalidated and that the ground of invalidation must necessarily fall within the four corners of the aforementioned two grounds.

8. Similarly in Dalmia Cement (Bharat) Ltd. and Anr. v. Union of India and Ors. , the Hon'ble Supreme Court

restated the principle -

there is always presumption in favour of constitutionality. The legislature appreciates the needs of the people and directs the laws to the problems made manifest by experience and discrimination is based on adequate grounds. The Court does not supplant the feel and experiment of the expert by its own views. Court in deference to legislative judgment, imposes self-restraint to adjudge on crudities and experiment but concern on core constitutionality.

9. Similar view was taken by the Hon'ble Supreme Court in the case of Consumer Education & Research Society v. Union of India and Ors. reported in (2002) 2 SCC 599. The Hon'ble Supreme Court while reaching the conclusion considering the materials before it observed that the legislation could have done better by considering that some aspects deserved better consideration and some other relevant aspects should also have been taken into account by the State Legislature before enactment of a law, but reiterated -

the State Legislature consists of representatives of the people and it can be presumed that those representatives know the local areas well and are also well aware of the requirements of that area. It will not be proper to question the decision of the State Legislature in a matter of this type unless there are substantial and compelling reasons to do so. Even when it is found by the Court that the decision was taken by the State Legislature hastily and without considering all the relevant aspects, it will not be prudent to invalidate its decision unless there is material to show that it will have irreversible adverse effect on the wildlife and the environment.

10. The other principle which has been very clearly stated by the Hon'ble Supreme Court while considering the argument of ultra vires has been laid down in the case of State of A.P. and Ors. v. Mcdowell & Co. and Ors. . The Hon'ble Supreme Court observed:

it is enough for us to say that by whatever name it is characterized, the ground of invalidation must fall within the four corners of the two grounds mentioned above. In other words, say, if an enactment is challenged as violative of Article 14, it can be struck down only if it is found that it is violative of the equality clause/equal protection clause enshrined therein. Similarly, if an enactment is challenged as violative of any of the fundamental rights guaranteed by Clauses (a) to (g) of Article 19(1), it can be struck down only if it is found not saved by any of the Clauses (2) to (6) of Article 19 and so on. No enactment can be struck down by just saving that it is arbitrary or unreasonable.

Therefore, without having a direct nexus that the violation of fundamental rights, on the vague assertion of arbitrariness or unreasonableness on the ground as may be available to challenge on administrative action.:

11. Likewise, it has long been accepted by the Courts in India that malafide cannot be a ground for invalidating a legislation. If any reference can be referred to, one can refer to the case of K. Nagaraj and Ors. v. State of Andhra Pradesh and Anr. . It was a case in which validity of an Ordinance issued by the Government of AP State was under challenge. Holding the power to issue Ordinance to be a legislative power at par with power of legislature to enact any statute, challenge to constitutional validity is limited to such grounds only on which a plenary legislation can be invalidated. The Hon'ble Supreme Court observed:

It is impossible to accept the submission that the Ordinance can be invalidated on the ground of non-application of mind. The power to issue an ordinance is not an executive power but is the power of the executive to legislate. The power of the Government to promulgate an Ordinance is contained in Article 213 which occurs in Chapter IV of Part VI of the Constitution. The heading of that Chapter is "Legislative Power of the Governor". This power is plenary within its field like the power of the State Legislature to pass laws and there are no limitations upon that power except those to which the legislative power of the State Legislature is subject. Therefore, though an ordinance can be invalidated for contravention of the constitutional limitations which exist upon the power of the State legislature to pass laws it cannot be declared invalid for the reason of non-application of mind, any more than any other law can be. An executive act is liable to be struck down on the ground of non-application of mind. Not the act of a Legislature.

12. The issue about repeal being a colourable exercise of legislative power is mala fide really relates to competence to enact law. The doctrine of colourable exercise of legislative power conveys that the legislature in passing a statute though purporting to act within its power has no substance and has really transgressed those powers. In K.C. Gajapati Narayan Deo v. State of Orissa , the Apex Court said -

It may be made clear at the outset that the doctrine of colourable legislation does not involve any question of 'bona fides' or 'mala fides' on the part of the legislature. The whole doctrine resolves itself into the question of competency of a particular legislature to enact a particular law. If the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant.

13. In this connection reference can also be made to Naga People's Movement of Human Rights v. Union of India . Again in Welfare Assocn. A.R.P., Maharashtra and Anr. v. Ranjit P. Gohil and Ors. , the Apex Court said -

So long as the legislative competence is available, the motive behind enactment cannot be enquired into it.

The Court also excluded the mala fide as a ground of invalidating the plenary legislative instrument like ordinance promulgated by the Governor of a State in exercise of a legislative power by the executive and held that

the argument of mala fides is misconceived. The legislature, as a body, cannot be accused of having passed a law for an extraneous purpose. Its reasons for passing a law are those that are stated in the Objects and Reasons and if, none are so stated, as appear from the provisions enacted by it. Even assuming that the executive, in a given case, has an ulterior motive in moving a legislation, that motive cannot render the passing of the law mala fide. This kind of 'transferred malice' is unknown in the field of legislation.

14. If we examine the matter in the light of aforesaid principles the contentions of invalidating a legislative enactment founded on (i) non-consideration of relevant aspects of the matter before enacting the Repeal Act or not, (ii) not making an enquiry before the change of legislative policy or (iii) enacting a law with ulterior motive of acquiring the assets of the Market Board or (iv) power having been exercised for the purpose other than stated in the object, is beyond the enquiry while considering the impugned. Act to be ultra vires the constitutional limits. When the legislative competence to enact a law is not in question, nor it could be, the power of repealing a law being co-extensive with the legislative competence to enact repealed Act, accepting such an argument about legislative incompetency to Repeal Act, 2006 would be to accept the lack of legislative competence in enacting the Act of 1960 also.

15. Likewise, the assertion that by virtue of the Repeal Act, 2006, without enacting a new law on the subject would be arbitrary and unreasonable is also not sustainable. This contention is based on assumption that once any law is enacted, it must necessarily continue in same field; that repeal cannot be made but repeal of such law must be by substituting some other provisions or statute to occupy the same field. This premise is itself not well founded. It is not incumbent upon the legislature to necessarily enact a new law on the subject. The legislative fields reserved for State legislators identifies the subject or fields on which State legislatures will be competent to make law. But it is not incumbent upon legislatures to enact law in respect of all subject matters reserved for exercise of its legislative power.

Under this argument the command which the petitioners are seeking in substance is to seek a declaration that the legislature cannot repeal an existing law enacting regulation on agriculture produce market, unless a new law on the subject viz. regulating such market is enacted. Such a command is not permissible.

While Article 13(2) of the Constitution puts a restriction on making of any law which takes away or abridges the rights conferred by Part III and any law made in contravention of this clause shall, to the extent of the contravention, be void. In contrast while acknowledging the fundamental rights under Article 19 of the Constitution in various fields including freedom, to practice any profession, or to carry on any occupation, trade or business, a provision has been made enabling the Legislature to make laws which may impose reasonable restrictions on enjoyment of such freedom.

16. Clause (6) of Article 19 of the Constitution reads that nothing in Sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause.

17. Apparently Clause (6) of Article 19 is an enabling provision which enables the legislatures to make certain laws which may result in imposition of reasonable restrictions resulting in curtailment of the enjoyment of the rights guaranteed under Article 19(1)(g) of the Constitution, but it is not a mandate that the Legislature is under an obligation to make such laws for imposing reasonable restrictions. That being the regulatory provision restricting the freedom of trade and commerce, the provisions made by the legislative enactment can also be removed or lifted within its competence by a law made by it.

This principle was enunciated by the Hon'ble Supreme Court while considering the law relating to taking away the Rights of Citizenship, in Izhar Ahmad Khan v. Union of India .

While fundamental rights are conferred by Constitution, its taking away is beyond the pail of legislative competence, what is given to legislatures is to impose reasonable restrictions on such fundamental rights in public interest, clearly indicating that in contrast to fundamental rights, restriction on such rights are mere creation of legislature. What is creation of legislation can also be lifted by legislation. In Narendra Chand Hem Raj and Ors. Lt. Governor, H.P. and in State of J. & K. v. A.R. Zakki

the Apex Court made it clear that no mandamus can be issued to a legislature to enact a law which it is competent to enact. Likewise answering a Reference in Re. 143 of the Constitution in Re. Under Article 143, Constitution of India , the Court held that no command preventing a legislature from enacting a law can be issued on the ground that if enacted it will be in contravention of Constitutional provisions.

18. The argument made before us is similar in nature that if under the scheme of the Constitution it enables the Legislature to impose reasonable restrictions on the fundamental rights of citizen, once it is imposed, it cannot be taken away on the ground that it also infringes the fundamental rights. The regulation of a trade being a restriction is the product of the legislative enactment and is not the product of the constitutional mandate. That being so, it is well settled part of principle that power to repeal a law is co-extensive with its power to enact such a law. Reference in this regard may be made to Ramkrishna v. Janpad Sabha ; in which the Apex Court was considering whether a provincial legislature had power to discontinue levy of tax by effecting a repeal of the provision. It has stated -

There is no doubt that general principle is that the power of a legislative body to repeal a law is co-extensive as to the power to enact such a law.

The Court drew its conclusion from the following statement of principle stated in negative by Lord Watson in Attorney General For Ontario v. Attorney General for the Dominion 1896 AC 348.

Neither the Parliament of Canada nor the provincial legislatures have authority to repeal statutes which they could not directly enact.

19. The power of repeal is founded on the basic principle that the Parliament or for that matter any legislature cannot bind itself or subsequent legislature from the freedom to enact a law which it proposes to make. It is not permissible to put fetters on exercise of legislative power of its subsequent legislature or denude itself of its authority to legislate by prohibiting it to undo what it has already done. If that were so, all laws will become perpetual and the very purpose of social evolution through evolution of law would be frustrated. The fabric of democracy rests on the evolution of social order through making of laws as per the contemporary needs of the society and not to be governed by laws which may become dogmatic, archaic, irrelevant or counter productive in new circumstances that come on the centre stage.

20. The doctrinaire view about power of any legislature to repeal or abrogate an existing enactment is to treat it absolute in term.

Sutherland in his Statutory Construction (Vol. 1, 3^rd Ed. Article 2003, pp 490-95) has observed that -

The efficacy of the legislature depends upon the possession of the power to repeal the existing law, for, without this attribute, the power to enact will be ineffective and but for such plenary power there will be flood of contradictory enactments. Consequently the legislative power to repeal prior laws is not inhibited by any constitutional prohibitions, but exists as a necessary concomitant function of the legislative power.

Allen in his Law in Making has said that

No statute can make it secure against repeal.... In any enlightened government, an unrepeatable statute is contradiction in terms, striking as it does at the very root of legislative theory.

Craies on Statute Law, 7^th Ed. P 407 (Indian Print 1999) has explained the power of any legislature to repeal any existing law as under -

No statute can be absolutely perpetual, that is to say, incapable of being repealed, for "...though diverse Parliaments have attempted to bar, restrain, suspend, qualify, or make void subsequent Parliaments, yet could they never effect it, for the latter Parliament hath even power to abrogate suspend, qualify, explain, or make void the former in the whole or in any part thereof, notwithstanding any words of restraint, prohibition, or penalty in the former, for it is a maxim in the law of Paliament, Quod leges posteriores priores contrarias abrogant." Formerly there was one supposed exception to this rule, namely, that a statute could not be altered by any Act passed in the same session; but that exception was removed in 1850, since which date "Any Act may be altered, amended, or repealed in the same session of Parliament.

Dicey in his Constitution opined that no statute can be absolutely perpetual that is to say incapable of being repealed.

A Full Bench of Punjab High Court in Risaldar Major Amar Singh v. R.L. Aggarwal applied this principle holding -

No body has a vested right in a statute. An act may be very beneficial to a particular person or its repeal affects him injuriously, yet the right of the legislature to abrogate an Act by repealing it is absolute.

21. Apparently the objects of the Repeal Act have been stated to be the failure of the regulated market system and for giving impetus to freedom of contract in the field of marketing of agricultural produce. It is in tune with the current policy of the State towards liberalization of trade and commerce followed by this country since 1990 in the changed scenario of the world economic trend with the advent of WTO and various other trade treaties emerging on the horizon as massengers of globalization and liberalization aimed at sustainable growth and development through public - private partnership with receding regulatory regimes.

22. The principle equally answers the argument raised by the petitioners that a law made in furtherance of implementing the Directive Principles of State Policy cannot be withdrawn altogether. This argument is also founded on irreversibility of making of law by a legislature at any given time.

For the reasons stated above, the argument leading to perpetuality of any enactment cannot be accepted.

We are also not impressed by the contention that because the Rules of business have not been followed in the matter of bringing a Bill to be enacted as a law before the Legislative Assembly, Article 212 of the Constitution provides a complete answer to this contention to challenge the validity of the Repeal Act.

23. Article 212(2) of the Constitution mandates that the validity of any proceedings and the Legislature of a State shall not be called in question on the ground of any alleged irregularity of procedure.

The matter was examined by the Hon'ble Supreme Court very early during the formative period of the constitutional jurisprudence.

In the State of Bihar v. Kameshwar Singh ,

where a Bill was duly endorsed by the Speaker but was questioned on the ground that the proceedings of the legislature did not record that the Bill was formally put to the House under the Rules of business for the purpose of invalidating the enactment. This contention was not countenanced by the Hon'ble Supreme Court.

In the case of M.S.M. Sharma v. Dr. Shree Krishna Sinha and Ors. , a Constitution Bench laid down that the

validity of the proceedings inside the Legislature of a State cannot be called in question on the allegation that the procedure laid down by the law had not been strictly followed. No Court can go into those questions which are within the special jurisdiction of the Legislature itself, which has the power to conduct its own business.

Thus the contention about the invalidity of impugned Act on the ground that rules of business for introducing the bill in Legislative Assembly were not followed cannot be sustained as a ground to invalidate the Act.

24. Coming next to the contention about the necessity of obtaining prior assent of the President. It was contended that what is the procedure required to be followed for enacting a law is necessarily required to be followed for repealing that law and, since for enacting the law, the prior assent of the President was required, for enacting repealing Act also, prior assent of the President required to be obtained as a mandatory pre-requisite before the law could be enacted.

The argument appears to be facile and fascinating but on scrutiny of the provisions of the Constitution and the precedent relied on by the learned Counsel, it does not carry the case of the petitioner further.

25. Before introducing the Bill in the State Legislative Assembly for enacting a law falling within the ambit of Article 304(b) read with Article 301 of the Constitution, it is the required to be presented before the President for his assent. This requirement is not absolute in forms for enacting every law within the legislative field of the State. Such assent is only required if the statute to be enacted is for the purpose of imposing restriction on free movement of trade, commerce and interaction within the territory of India.

26. Therefore, for the purpose of enacting only such law which results in imposing reasonable restriction on freedom of trade, commerce or intercourse throughout the country, which otherwise transgress the constitutional mandate under Article 301, in terms of Article 304(b) of the Constitution, before enacting such a law by State Legislature, the Bill has to be presented before the President.

Therefore, the necessary requirement of seeking assent of the President in terms of provision to Article 304(b) is that the law to be enacted by the State Legislature must fall within the purview of law imposing under restriction on free movement of trade, commerce or interaction.

27. Article 304(b) read with Article 301, makes the scheme of saving a State law imposing restrictions from the vice of being beyond ultra vires Article 301 makes a wholesome reading.

28. Article 301 declares that subject to the other provisions of Part XIII, trade, commerce and intercourse throughout the territory of India shall be free. Article 302 enables Parliament to make law by imposing such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. Article 303 prohibits making of any law either by Parliament or Legislature of a State giving or authorizing the giving of, any preference to one State over another, or making, or authorizing the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. Thus Article 303 imposes restrictions on the legislative powers vested in the State Legislature or Parliament as per the Lists in the Seventh Schedule.

29. Article 304 of the Constitution which is a non-obstinate clause opens a room for State Legislature to enact a law in the field falling under Article 301, firstly, for imposing on goods imported from other States or the Union Territories any tax to which similar goods manufactured or produced in that State are subject, so, however, not to discriminate between goods so imported and goods the like manufactured or produced within the State. Thus Clause (1) of Article 304 is in tune with the restrictions imposed under Article 303(1), while Article 303(1) prohibits making of law by giving preference or making discrimination between one State and another, Article 304(a) makes it possible for the State to enact such laws for the purpose of imposing tax on goods imported from other States or the Union Territories provided the goods manufactured in the State are subjected to similar tax. Thus on the import of goods from other States, the like tax is to be imposed on the goods manufactured within the State. The tax becomes non-discriminatory vis-a-vis commodities coming from outside the State and the like commodities manufactured within the State. In fact, Clause (a) is proviso to Article 303.

30. Coming to Clause (b) of Article 304, it enables the State Legislature to impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest, provided that no Bill or amendment for the purposes of Clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.

31. Thus under the proviso to Article 304(b), a Bill or amendment in existing enactment requires its placing before the President only if the bill or amendment is to result in imposition of reasonable restrictions on the freedom of trade, commerce or intercourse that may be required in the public interest. But if any law not falling within the mischief of Article 301 and is otherwise within the competence of State Legislature, is not required to he presented to the President for his sanction before introducing in the Legislative Assembly.

The very purpose and object of the entire scheme unfolded in Part XIII of the Constitution is that for enactment of any law which is not for imposing any restriction much less reasonable restriction on freedom of trade, commerce or intercourse, the requirement of previous sanction of the President is not there. That being so, for the repeal of a law which is otherwise in the legislative competence of the State which does not result in imposition of the reasonable restrictions on the freedom of trade, commerce or intercourse but results in lifting existing restrictions is not required to be presented before the President for his sanction before introducing the same in the Legislative Assembly.

32. In this connection we may refer to the ratio of the Hon'ble Supreme Court decision relied on by the learned Counsel for the petitioners in the case of State of Maharashtra v. The Central Provinces Manganese Ore Co. Ltd. . The learned Counsel has relied

on the following observations made by the Apex Court.

...A repeal and a displacement of a legislative provision by a fresh enactment can only take place after that elaborate procedure has been followed in toto. In the case of any rule contained in an executive instruction, on the other hand, the repeal as well as displacement are capable of being achieved and inferred from a bare issue of fresh instructions on the same subject.

The aforesaid principle has been read as an abstract doctrine de hors from the controversy raised in the petition before the Supreme court and the answer that came. It would be necessary to understand that aspect of the matter, to note in some details the controversy raised before the Apex Court. It related to an amendment in Central Provinces and Berar Sales Tax Act vide the Amendment Act of 1949, which was brought into force on 11.4.1949. By this amendment, the Explanation appended to Section 2 of the Central Provinces and Berar Sales Tax Act, 1947 had been substituted by giving extended meaning to the expression 'Sale of Goods' for the purpose of levying tax on inter-state sales beyond the definition of 'Sale' under the Sale of Goods Act, 1930.

33. Section 107 of the Government of India Act, 1935, a precursor of Article 254 of the Constitution which provided that if any provision of a Provincial law is repugnant to any provision of a Federal law, which the Federal Legislature is competent to enact, or to any provision of an existing Indian law with respect to one of the matters enumerated in the Concurrent Legislative List, then, subject to the provisions of Section 107, the Federal law, whether passed before or after the Provincial law, or, as the case may be, the existing Indian law, shall prevail and the Provincial law shall, to the extent of the repugnancy, be void. However, like Article 254 of the Constitution, it saved the Provincial law made on the same subject with the previous assent of the Governor General from being invalid on the ground of repugnancy.

34. Validity of this amendment had been challenged for the purpose of contending that since the substitution of Explanation to Section 2 of the Act of 1947, if validly enacted, was to replace the existing Explanation to Section 2, substituting the earlier enactment. The substitution will result in repeal of the existing Explanation. It was a case of implied repeal of an existing provision in existing enactment, by substitution of new provision and was not a case by enacting a new law on the subject of express repeal of any provision simplicitor. The explanation inserted by substitution had been enacted without prior assent of the Governor General in terms of Section 107 of the Government of India Act, 1935. It was contended that for the repeal the assent of the Governor General was not needed, therefore, the repeal became effective. Since the enactment of Explanation needed assent of Governor General, but the same had not been obtained, the substantive amended provision was still-born in law. It was an ingenuine argument for the purpose of avoiding the sales tax assessment. With this premise it was contended that unamended provision stood repealed because of amending Act, and new provision did not come into operation. Hence, there was no law under which sales tax could be assessed.

35. Since it was a repeal by substitution of new provision by amendment of the existing provision, the argument was to split the reading of provision in the manner to spell two different consequences taking place independent of each other. The Court did not countenance the argument of split consequences one of repeal being operative, but the amendment becoming ineffective as a result of one single statute. It was not a case before their Lordships whether the Central Provinces and Berar Act was repealed by the competent legislation nor it was held that such a repeal required the assent of the Governor General and thereafter a new independent Legislation had been enacted. Since the repeal implied as a consequence of the substitution of new provision for existing one, the repeal could not have been severed and divorced from substitution of new provision. The substitution having not taken place because of not following the necessary requirements of previous assent of the Governor General, the consequence of implied repeal also did not take place. The Amendment Act failed in its entirety not affecting the existing law.

We are not faced with like situation where the repeal is by the methodology of enacting a law substituting the old one. The case at hand is of express repeal of existing Statute, without enacting a new law. In such event the question of seeking President's assent did not arise.

36. This was again clarified in Indian Express Newspapers (Bombay) Pvt. Ltd. and Ors. v. Union of India and Ors. pointing out distinction between consequence of law enacted within competence to replace existing law, but the new Act is held invalid because of ground other than legislative competence and effect of invalidity of law because of lack of legislative competence of the enacting authority. The position was summed up in this regard in Principles of Statutory Interpretation by Justice G.P. Singh as under -

Substitution of a provision results in repeal of the earlier provision and its replacement by the new provision. Substitution thus combines repeal and fresh enactment. Therefore when a new provision is 'substituted' in place of or is made in supersession of an existing provision, the declaration of invalidity of the new provision on the ground of want of competence will also invalidate the repeal; but if the declaration of invalidity is on other grounds e.g. arbitrariness or violation of fundamental rights, the repeal, speaking generally will be effective although the new provision is declared invalid unless from the totality of circumstances and the context it is found that there was no intention to repeal in the event of the new provision being struck down.

37. In this connection the learned Counsel for the petitioners have also relied on the decision of the Hon'ble Supreme Court in Saghir Ahmad and Anr. v. State of U.P. and Ors. .

The question arose about the validity of U.P. State Road Transport Act, which became law with effect from 10.2.1951. The High Court had upheld the constitutional validity of the Act by holding that mere deprivation of the petitioners' right to run buses or their interest in a commercial undertaking is not sufficient to attract the operation of Article 31(2) of the Constitution, as it then obtained. Reversing that finding of the High Court, the Hon'ble Supreme Court held that U.P. State Road Transport Act to be unconstitutional by considering that depriving the petitioners' right to run buses or their interest in a commercial undertaking do attract Article 31(2) of the Constitution resulting in deprivation of property without authority of law by not providing for any compensation. Therefore, the appeals of the petitioners were allowed by issuing a mandamus that the respondents in those appeals were restrained from enforcing the provisions of U.P. Road Transport Act, 1950 against the appellants or the workmen working under them.

While considering these appeals against the judgment of the Allahabad High Court, the Court has also considered the question whether the Act offends Article 301 of the Constitution. While considering that aspect of the matter, the Court made the following observations:

...The question of reasonable restrictions could not also arise in this case, as the bill was not introduced with the previous sanction of the President as required by the proviso to Section 304(b). It is true that the consent of the President was taken subsequently hut the proviso expressly insists on the sanction being taken previous to the introduction of the bill.

38. Relying on the aforesaid observations it has been contended by the learned Counsel that taking of the previous sanction of the President is a condition precedent and mandatory provision of the Constitution and subsequent assent of the President also does not cure the defect in enacting such a law without previous sanction of the President.

39. We have already discussed about that in the present case for the purpose of repeal, since it does not result in imposition of any restrictions on free movement of trade, commerce or interaction within the territory of India only but rather aimed at lifting such restrictions, the question of putting the Bill before introducing in the Legislative Assembly for the assent of the President did not arise.

40. We have referred to this judgment only to point out that this aspect of the matter that subsequent sanction also cannot cure the original defect has lost its significance because of specific provision made in that regard in Article 255 of the Constitution. Moreover in respect of the contentions related to Articles 301 & 304, the Court has observed:

We have thus indicated only the points that could be raised and the possible views that could be taken but as we have said already, we do not desire to express any final opinion on these points as it is unnecessary for purposes of the present case.

Thus the statement relied on by learned Counsel on the subject was not the final statement on law by the Supreme Court.

In the celebrated case of Atiabari Tea Co. Ltd. v. The State of Assam and Ors. , the Constitution Bench stated

the position relating to the consent obtained subsequent to the passing of the Act. The Court held that if the previous sanction of the President is not obtained, that infirmity can be cured by recourse to Article 255 of the Constitution. This view was reiterated in Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan and Ors. .

41. The reference to Hayden's case also has hardly any place while considering the constitutional validity of the Legislative Act. The principle enunciated in Hayden's case is a rule of construction which can be applied while interpreting the language of an existing statute. But what is the rule of construction of a statute cannot be a yardstick or touchstone on which the validity of the law can be examined and adjudicated. The reliance of Hayden's case, in our opinion, is wholly misplaced.

It was also contended by the learned Counsel appearing for the petitioners that the Amendment Act is unreasonable for the reason that it does not spell out any object for the purpose for which the repeal was being enacted inasmuch as no preamble has been provided to the Act and it has also been urged in that connection that with regard to the aims and objects following statement has been made:

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42. It was urged that the Aims & Objects do not speak about the nature of failure, which the regulated market system has failed to achieve its objective and it was also urged in that connection that no law replacing the Bihar Agriculture Produce Market Act, 1960 has been enacted for the purpose of giving effect to the aims and objects and to cure the defects. The Repeal Act while it suggests that the object of the Act is to bring relevant reforms and regulations in the Agricultural Produce Market and to give impetus to the private and cooperative markets on the basis of mutual contract and providing for direct purchase from the farmers, but no provision has been made in furtherance of this object.

43. This contention is founded on the fallacious premise that the aims and objects are essential part of the legislative enactment which can be read for the purpose of considering its validity. The aims and objects too are one of the tools for interpreting the statute where there is any ambiguity or difficulties which may arise in interpreting the statute. If the statute is clear from its own expressions, the question of looking at the aims and objects does not arise. Even if the aims and objects are not stated, it will not invalidate the Statute. The aims and objects have to be gathered from the provisions of the Act. If the provisions made in the Act are not in furtherance of the stated aims and objects, it still cannot result in invalidation of the law. What has been enacted has to be implemented in its true spirit and what has not been enacted cannot be enforced by merely reading the aims and objects.

No ambiguity has been found or urged before us in the manner of reading of the Repeal Act which is challenged as ultra vires. The reading of this Act leaves no room for doubt that it is aimed at effacing existing Act of 1960, without any intention to enact new law on the subject indicating that Legislature of State does not wish to continue with regulating market of agricultural produce. Therefore, the question of construing the aims and objects to find the true meaning of the Act really does not arise for consideration in these petitions. Moreover, it is not the requirement that the statement of aims and objects must also give reasons for holding such aims and objects good for the purpose of enacting a law. The aims and objects for repeal of 1960 Act have been stated clearly that, in the opinion of the legislature, the existing law has failed to achieve its objectives. Hence, law which has failed to achieve its object in the opinion of the legislature, the same has been removed from Statute Book by repeal.

44. The other purpose has been stated is to give incentive to private and co-operative markets for trading on mutual contract basis directly from the farmers. Apparently by repeal, the regulations, which were coming in way of giving effect to the making of a bilateral and international treaties as a part of policy of globalization and liberalization by becoming participants in free markets with least regulations. If the regulations are removed, the market becomes a free market where the mutual contract becomes the rule of trading game and market forces become the governing principle. Therefore, it cannot be said that no aims and objects have been stated or aims and objects stated are at cross purpose with the Act. This is apart from the reasons, we have already stated, that the aims and objects cannot be read for the purpose of invalidating the law and that can be read only for the purpose of interpreting the language of the legislation when there is ambiguity or two divergent views are possible. It is in the latter case one of the two such interpretations is to be accepted in accordance with or further stated object of the Act. Thus this contention also does not support the challenge to the validity of the Repeal Act of 2006.

45. Apart from the aforesaid contentions which have failed to sustain themselves for challenging the Repeal Act in its entirety for treating it as a still-born exercise, two more grounds have been raised during the course of arguments by the learned Counsel. Those are arguments related to the specific provision made under the Repeal Act.

46. One such argument has been advanced in respect of Section 4(iv) of the Act. It has been urged that by making a provision the Administrator shall be competent to issue such direction as is deemed necessary and expedient to secure safe possession of immovable and movable assets and such direction shall be binding on the Special Officer and all others. It has vested unguided and unbridled power vested in State Officers without there being any guidelines. Likewise, in Clause (vi) of Section 4 of the Act, where all immovable assets of the Board or the Committee vested in State shall be utilized only for agriculture and farmer related activities including establishment of agro-processing industries, horticulture, agro-service, agricultural marketing, storage of agricultural produce is too vague to provide any guideline about the utilization of the assets of the Board.

47. The crux of the arguments about Clause (vi) of Section 4 was that since the assets of the Board are the accumulation of market fees which is a compensatory tax in nature and was designed for the purpose of trade, commerce or intercourse, to which the facility was to be provided out of the fees collected from them, it cannot be used only for the purpose for which the same has been collected.

Both the above arguments do not sustain themselves on the language of the Act itself.

48. Clause (iii) of Section 4 of the Repeal Act provides that immovable and moveable assets in possession of Administrator or Special officer, as the case may be, shall remain in their possession for and on behalf of the State Government, and Clause (v) of Section 4 of the Repeal Act provides that the State Government may issue such direction, order, instructions as is deemed necessary and expedient to maintain security and safety of assets or to prevent any kind of injury, damage or dissipation of assets and such direction, order or instruction shall be binding on all concerned including Administrator and Special officer.

49. Clause (vi), which is important for the purpose of this contention, reads that all immovable assets of the Board or the Committee shall be utilized only for agriculture and farmer related activities including establishment of agro-processing industries, horticulture, agro-service, agricultural marketing, storage of agricultural produce, and if read together with Section 4, it unveils the wholesome scheme about the utilization of the assets of the Market Board or the Committee or the Samiti, as the case may be.

50. It appears from the above scheme that the property of the State is to be administered by the Administrator to whom possession of the property would be handed over for the purpose of its proper utilization in terms of the guidelines set forth under Clause (vi) detailing the purpose for which such assets can be utilized. Therefore, there is no room to contend that unbridled or uncanalized discretionary power vests in the Administrator about utilization of the assets which is vested in the State Government as a result of the repeal of the Act. Moreover, the ultimate power vests in the State itself to issue necessary directions for the management and utilization of such assets. The Administrator has to work in accordance with the same.

51. The guideline emerging from Clause (vi) of Section 4 is further indicative of the fact that those assets are utilized only for the purpose related to agricultural produce marketing and other activities incidental to agriculture. The Agriculture Produce Market Act, 1960 was also enacted for the purpose of providing market facilities to agricultural produce in furtherance of the interest of the agriculturists. There being no disharmony between the purpose for which the Repeal Act, 2006 has come into force and the purpose in furtherance of which the Repeal Act has been brought about and the purpose for which the assets of Market Board vesting in the State has to be applied. Therefore, no dichotomy can be laid into the clauses of the Repeal Act of 2006 which go contrary to reasonableness of the provisions made thereunder.

52. The other limb of argument was relating to Section 6 of the Repeal Act which concerns the existing employees at the time of coming into force of the Act either with the Board or with the Committee or with the Samiti.

The contention has been firstly that the employees have been left unprotected high and dry and no provision has been made for their continued employment. This contention is also not well founded, for, Clause (i) of Section 6 takes care of the interest of the employees during the transitory period. It ordains that on and from the date of repeal of the Act of 1960, all officers and employees of the Board shall remain in employment, as if the Act has not been repealed and they shall continue to be paid same salary and allowances as were payable on the date of repeal of the Act of 1960 till such time State Government has taken such final decision as is provided thereafter. This provision cannot, by any reason, be held to be contrary to the interest of the workmen as it safeguards the complete interest of the workmen working until the scheme is framed by the State Government.

53. The fact that the Repeal Act has made a provision of this nature goes to show the reasonableness of the provision. In the absence of such provision, the services of the employees whether of the Board or of the Committee or of the Samiti would have come to an end immediately. Their only claim would have been for payment of arrears of salary, compensation, retrial benefits, if any, against the successor in whom the assets of the Board or Committee or Samiti are subsequently vested, but there would have been no claim for framing of a scheme for their continued employment or other betterment schemes. After providing for the transitory period, complete protection with regard to their betterment has been duly taken care of.

54. Section 6 of the Repeal Act, 2006 further indicates that the State Government shall constitute a committee of Secretaries consisting of three Secretaries, who shall prepare detail scheme of absorption, retirement, compulsory retirement or voluntary retirement, other service conditions of officers and employees of the Board and the Committee, and the scheme prepared by group of Secretaries shall be placed before the State Government within two months from the date of enforcement of the present Act. The State Government shall thereafter approve the same.

55. Thus the mandate was given to the Committee constituted under the Act to prepare a scheme detailing the criteria of absorption, retirement, compulsory retirement or voluntary retirement, wherever voluntary retirement scheme was to be offered to the existing employees, and also laying down other service conditions of officers and employees of the Board or the Committee or the Samiti and that those rules were to be laid only after the same are approved by the State Government. The State Government was left free to modify or amend in the scheme prepared by the Committee constituted for the purpose and on the final approval, the scheme was to be considered as a statutory scheme framed under this Act having the force of law. Thus enough safeguard has been provided for the future of the employees after the scheme has been framed. If anything wrong, contrary to the provisions of law is noticed in the scheme or the scheme is found to be ambiguous or it suffers from the vice of arbitrariness on the touchstone of constitutional mandates, the same is open to challenge by those who are affected by the operation of the Scheme.

56. It was also urged by the learned Counsel that in Section 3, the Act of 1960 and some of the Rules framed thereunder are repealed specifically, but no mention of Rules governing conditions of service of employees of Board have been mentioned. This by necessary implication means that Service Rules have not been repealed. This shows that Act has been repealed only partly for some purposes and partly continues for other purposes. This is not permissible. The contention is noticed to be rejected. The effect of repeal is complete. Under General Clauses Act, with the repeal of main Act, all rules, regulations or bye laws framed under repealed Act also stand repealed. Where in place of repealed Act, a new Act is enacted on same subject matter, and rules are required to be framed under new enactment, until new rules are framed under the new Act, the existing rules, under the repealed law holds the field. Reference be made to Section 27 of Bihar & Orissa General Clauses Act.

57. In the present case, under Section 6(1) of the Act of 2006, all the employees of the Board / Market Committees / Bazar Samitis are to continue on the same terms and conditions until appropriate scheme. It is implicit in it that until the employees of the Board / Committees / Samitis continue to be governed by existing terms and conditions, the existing Rules under Act, 1960 will continue and same shall cease to be effective on the coming into force the Scheme framed under Section 6(1). But in no case, such a result of the scheme of the Act of 2006, can be a ground for invalidating it.

58. An argument was also raised about the validity of the scheme which has come into operation during the pendency of the writ petitions. We refrain ourselves from making any observation inasmuch that being not a part of the current discussion and is a matter of new grievance against the scheme operating against the persons aggrieved therefrom. For such relief, the aggrieved parties are at liberty to prosecute their remedies independently. Thus we do not find any merit in any of the contention raised about the validity of Section 4 or Section 6 of the Repeal Act, 2006.

59. In view of the aforesaid observations, we find no force in any of the writ petitions. All the writ petitions fail and are hereby dismissed. No costs.